Tyler Technologies ( TYL Quick Quote TYL - Free Report) recently announced its plan to make a public offering of $1.6 billion aggregate principal amount of convertible senior notes. The company stated that the notes would be issued in two tranches of different maturities. Senior Notes Offering Detail
Tyler intends to offer $1 billion worth of convertible senior notes maturing on Mar 15, 2026. Another $600 million of senior notes would have a maturity date of Mar 15, 2028. The company will also grant initial buyers a 13-day option to purchase an additional $150 million worth of 2026 notes and $90 million in case of 2028 notes.
Tyler also noted that the interests accrued on the aforementioned senior notes would be payable semi-annually. However, management noted that the final terms of the notes, including initial conversion rate, interest rates and other terms, shall be determined at the pricing of the offering.
Tyler intends to use the net proceeds from the aforementioned offerings to pay the purchase price of the proposed acquisition of NIC Inc. Notably, last month, the firm agreed to buy NIC in an all-cash transaction worth $2.3 billion.
At the time of announcement, Tyler had mentioned that it would finance the transaction through a combination of approximately $700 million of available cash and the remaining $1.6 billion through new debt.
Low Borrowing Costs
Borrowing costs continue to be low, enabling companies to obtain easy financing. With the U.S. treasuries offering low rates, corporate bonds and borrowings from banks are now witnessing high demand.
We believe the latest offering will boost the company’s financial flexibility and help meet its financial obligations in an efficient way. Moreover, it provides ample scope to deploy capital for long-term growth opportunities and reward higher returns to stockholders.
Tyler has a robust balance sheet with ample liquidity position and less debt obligations that provide the flexibility to pursue growth initiatives, including acquisitions. As of Dec 31, 2020, cash and short-term investments were $709 million, while long-term debt (including current maturities) was approximately $22 million.
Tyler carries a Zacks Rank #5 (Strong Sell).
You can see
. the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here Companies Enhancing Liquidity Amid Pandemic
Tyler’s latest senior notes offering and sizeable liquidity position amid the pandemic-led economic and business uncertainties bodes well. In the wake of the pandemic, companies with improved liquidity can sail through these volatile times and Tyler ensured that by enhancing the same.
On Mar 4,
RealReal ( REAL Quick Quote REAL - Free Report) issued $250 million worth 1% Convertible Senior Notes due 2028. A day earlier, Beyond Meat ( BYND Quick Quote BYND - Free Report) upsized its 0% convertible senior notes offering to $1 billion from $750 million.
On Mar 4,
Ocwen Financial Corporation ( OCN Quick Quote OCN - Free Report) announced that closing the previously-announced offering of $400 million aggregate principal amount of 7.875% Senior Secured Notes due 2026. Time to Invest in Legal Marijuana
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